Millicent job cuts jeoparise SA forestry sell off

The Rann government’s planned forestry sell off, which could be worth up to $1 billion, is under further pressure after the axing of local jobs by international paper products giant Kimberly-Clark.

Kimberly-Clark Corp has blamed “dumping" of imported tissues into the Australian market as well as the high dollar, rising energy prices and ageing infrastructure for its decision to cut up to 230 jobs in South Australia.

The American-based company, which produces products under a number of banners including Kleenex, Huggies and Kotex, on Tuesday announced the partial closure of its plant at Millicent Mill in South Australia and flagged the potential shutdown of its pulp mill in the same region in a restructuring of its Australian operations that could cost more than 230 jobs.

The job losses have complicated the state government's push to forward sell up to three harvests of state-owned pine plantations to help bolster its budget and boost the case for retaining its AAA credit rating.

A strong union and community backlash last year forced Treasurer Kevin Foley to promise that a regional impact study covering the state's south-east would be ready by March 2011.

The Construction Forestry Mining and Energy Union today expressed disappointment that the company’s international hierarchy had made the decision rather than local management, without discussions with unions and the workers on options for keeping the operations open.

"We don’t believe the equipment was as uncompetitive as the company says," said the federal secretary of the CFMEU’s pulp and paper division, Alex Millar.

Mr Millar said that local producers had been under pressure from the dumping of cheap overseas products, which included a long-running anti-dumping case taken by two local makers of tissues.

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But he said that dumping was not the direct cause of the Kimberly-Clark job losses, even though it was part of the broader pressure on local manufacturers along with rising power costs and uncertainty over future carbon taxes.

“The sad part now is that the product that was produced there will now mostly likely be replaced by imports," he said.

Industry Minister Kim Carr has announced a $17 million fund which will concentrate on attracting new investment to SA's south-east over the financial years 2011-12 and 2012-13, using $10 million from the Commonwealth and $7 million from the Rann government.

Senator Carr argued that the jobs losses followed a global review by Kimberly-Clark which affected plants in a number of countries.

"The focus of the fund will be on manufacturing and manufacturing services, and it will help create sustainable new jobs and opportunities for the region,'' he said.

In a statement, the company blamed a variety of economic factors as well as the factory’s age for the decision.

“The continued high level of the Australian dollar, difficulty in maintaining a ‘level playing field’ in the tissue market with dumped product and continued high and escalating energy prices in Australia have all contributed to a rapidly deteriorating environment for commodity pulp and tissue manufacture," Kimberly-Clark’s vice president of family care South Asia, Milo Foster, said.

“Ultimately though, the asset’s age and base technology limits our ability to respond effectively to competition, so this decision and consequent ones on pulp manufacturing have had to be made."

The news comes as the Australian Workers Union on Tuesday launched a campaign against dumping of cheap foreign manufactured goods in the local market, urging consumers to buy Australian made.

Mr Foster said Kimberly-Clark would shut the two oldest machines at the factory following a global business review.

He said the machinery at the plant had reached the point where it could no longer “economically produce the quality of products demanded by today’s Australian consumers".

The machines will stop production in May, resulting in the loss of 170 permanent jobs.

“The decision to restructure our Millicent operations was not taken lightly, and is no reflection on the great efforts of our employees at Millicent who have worked with us over the years to keep these assets competitive for as long as possible," he said.

Mr Foster said all affected employees would receive their full entitlements as well as assistance and counselling.

“We will work closely to deal fairly with the people affected to assist them in seeking new opportunities outside KCA," Mr Foster said.

The Millicent Mill will continue to employ around 370 people producing other products.

The company said it would also look at selling or closing its Tantanoola pulp mill, which had supplied the factory at Millicent Mill.

If a sale could not be reached, the pulp mill would be closed at a cost of a further 65 jobs.

Mr Foster said the company had invested more than $500 million over the past 10 years at its Australian manufacturing sites and remained committed to local manufacturing.